http://www.onlinejournal.com/Commentary/Hatfield062001/hatfield062001.html
It's time to demand a Senate investigation into Dubya's "Harkengate"
"It must in no way be construed as indicating that the party has been
exonerated or that no action may ultimately result."—A reference to Dubya in
a letter regarding an SEC investigation into possible insider trading
June 20, 2001—Now that the Democrats are once again running the show in the
U.S. Senate, they need to make up for lost time and get down to the real
business of government—spending millions and millions of taxpayer money on
investigative probes and special prosecutors.
Balzac once said, "Behind every great fortune there is a crime." Dubya became
a multimillionaire a couple of years ago because of an insider stock sale he
pulled off almost exactly 11 years to the day.
So if the Republicans can waste our hard-earned money on a multi-year,
multimillion-dollar expanded probe of a losing land proposition in Arkansas,
then it's time to demand an investigation into what I'll coin as "Harkengate."
But before we get to Dubya's financial shenanigans, let's take a quick jaunt
down memory lane to make sure everything is put in its proper perspective. I
just don't want anyone crying "foul" when I demand equal justice,
tit-for-tat, and what's good for the goose is good for the gander payback
time.
The so-called "Whitewater" scandal started with a little real estate deal 20
years ago. In 1978, then-Arkansas Attorney General Bill Clinton and his wife,
Hillary, became limited partners* in a venture with James and Susan McDougal
to buy 220 acres of riverfront land and form the Whitewater Development Corp.
The goal was to sell lots for vacation homes. But the partnership did poorly
and finally dissolved in 1992, leaving the Clintons reporting a net loss of
more than $40,000.
Over time, the investigation known as Whitewater grew well beyond allegations
related to the Clintons' financial and legal dealings in Arkansas. It also
encompassed such unrelated events as the firing of White House travel office
clerks, the 1993 suicide of White House counsel Vincent Foster and his filing
of delinquent Whitewater Corp. tax returns, the collection of hundreds of
confidential FBI files on prominent Republicans by a minor White House
operative in 1993 and 1994, and, of course, the sex scandal involving Cigar
Aficionado poster girl Monica Lewinsky.
The original Whitewater special prosecutor was Robert B. Fiske, Jr., a
moderate Republican selected in January 1994 by Attorney General Janet Reno,
who had the authority to make the appointment because the independent counsel
law had expired.
In August 1994, with the law renewed and Fiske under fire from conservatives
for lacking a pitbull aggressiveness in pursuit of the Clintons, the
three-judge panel in charge of appointing independent counsels abruptly
replaced him with a conservative activist named Kenneth W. Starr. (Starr had
been a top aide in the Reagan Justice Department, a federal appeals court
judge and then solicitor general under the first President Bush.)
Now that I've hopefully jump-started your memories of Whitewater and how it
all spun wildly out of control, let's once again revisit 1990 when the elder
Bush was living in the White House and Dubya was being paid $120,000 a year
(plus extensive stock options) to sit on the board of directors of
Texas-based Harken Energy Corporation.
The small oil company's financial advisers at Smith Barney issued a
detrimental report, expressing urgent concern in the company's rapidly
deteriorating financial standing. (Harken owed more than $150 million to
banks and other creditors while its assets were tied up in a Middle Eastern
drilling venture.)
On June 22, 1990, Dubya abruptly unloaded 60 percent of his Harken
stock—212,140 shares—for a handsome little profit of $848,560, plus some
change. The transaction came a week prior to the end of a quarter in which
the company lost $23.2 million. A quarterly report, issued in August 1990
documented the loss and company stock plummeted to $2.37 per share.
It just goes to show you even a blind squirrel can find an acorn once in
awhile.
Dubya, who sold at $4.12 per share, denied having any inside knowledge at the
time (and to think they called Clinton "Slick Willie"!), although he sat on
Harken's board, its audit committee and a panel looking at corporate
restructuring, which had met in May and worked directly with the Smith Barney
financial consultants.
Dubya's June 1990 transaction was an insider stock sale, but Securities and
Exchange Commission (SEC) records indicate he did not file the required
disclosure form, which was due no later than July 10, until eight months
later. (He later maintained that it was filed on time but the paperwork was
lost by the SEC.)
"I'm very comfortable in looking you in the eye and saying I did nothing
wrong on this," he told the press back then, adding that the Harken stock
sale was "entirely legal and proper."
The SEC investigated King George I's son in 1991 for possible insider
trading, the allegation of selling the stock with an insider's knowledge of
non-public, market-moving news, such as a poor earnings report, but ended its
review in October 1993 without filing charges.
"Please be advised," Bruce A. Hiler, associate director of the U.S.
Securities and Exchange Commission's enforcement division, said in the letter
to Bush's attorney, "that the investigation has been terminated as to the
conduct of Mr. Bush and that, at this time, no enforcement is contemplated
with respect to him."
But another passage in the SEC letter is the key as to whether a senate
subcommittee should be convened to thoroughly investigate Dubya's guilt or
innocence: "It must in no way be construed as indicating that the party has
been exonerated or that no action may ultimately result."
Yeah, folks, it says exactly what you think: The SEC never said he wasn't
dirty and Shrub may "ultimately" need a good scrubbin.'
Was it a real investigation or a whitewash of an insider stock sale by the
very fortunate son of a sitting president of the United States? At best, it
was it incomplete, and at worst, a cover-up.
Personally, I think it was the latter.
The inquiry was sullied because the SEC chairman at the time was Richard
Breeden, a former lawyer with the Houston-based law firm Baker & Botts.
Breeden had been deputy counsel to Dubya's papa when he was vice president
and received his SEC appointment after Bush moved into the White House.
In addition, the SEC general counsel was James R. Doty, who, working
previously as a private lawyer, assisted Dubya in negotiating the legal
contract for the purchase of the Texas Rangers baseball team in 1989. (Dubya
had acknowledged that he sold the Harken shares to repay $500,000 in loans
from the United Bank in Midland, which he used to fund his stake in the
Rangers partnership.)
"The case was handled and all decisions in the case were made by enforcement
division attorneys, all of whom are career prosecutors," claimed William
McLucas, the SEC's director of enforcement. "Investigations conducted by the
commission and the enforcement division are free of political influence, and
this investigation was no different," he added.
Dubya, who took eight months to notify the government of his sale of Harken
stock, also missed the filing deadline for reporting other insider trades
involving the Texas oil company, according to SEC records.
His November 1, 1986 acquisition of 212,152 shares of Harken stock as a
result of the merger of his Spectrum 7 company with Harken was not reported
until April 7, 1987. (The filing also disclosed Dubya's March 10, 1987,
purchase of an additional 80,000 shares.)
An April 22, 1987 filing listed a December 10, 1986 purchase of 80,000 shares
of Harken stock. Dubya's attorney stated that it was the same 80,000 shares
reported in the April 7, 1987 filing, but could not explain why it was
reported twice or which date was correct.
His June 16, 1989 purchase of 25,000 shares of Harken Energy stock was not
reported until a September 7, 1989 filing.
With his windfall of almost $850,000 from the sale of Harken stock in 1990
(as the company continued its downward spiral and record losses), Dubya paid
back his $500,000 loan to the Midand banks that helped him finance his
ownership interest in the Texas Rangers professional baseball team less than
a year ealier.
In 1998—a mere 3 years ago—media mogul Tom Hicks, the owner of the Dallas
Stars, agreed to purchase the Texas Rangers for $250 million, the
second-highest franchise fee paid in baseball history.
Hicks was not only paying for the team, but also the state-of-the-art
stadium—which the Rangers owned but taxpayers paid for through a half-cent
sales-tax levy—and three hundred acres of prime development land next to the
sports facility and the Six Flags Over Texas amusement park. (Financial World
named The Ballpark at Arlington in 1997 the most profitable venue in major
league baseball.)
"Taxpayers put up the money that increased the value of this franchise, and
Governor Bush is the beneficiary," claimed one state legislator at the time,
who questioned the ethics of the deal and unsuccessfully pushed his
colleagues for an investigation. Others called it "outright corporate
welfare."
With Hicks' purchase of the Rangers for $250 million, Dubya became an
overnight multimillionaire, receiving almost $15 million on an initial
investment in 1989 that totaled a mere $606,000—a profit of more than 2,300
percent!
In 1986, the West Texas oilman had claimed he was "all name and no money,"
but a dozen years later Dubya was both.
So bring on the special Senate investigations to look into possible insider
trading and undue political influence and let's get down and dirty.
And while the boys on Capitol Hill are digging into "Harkengate," they need
to find out why top execs at many of the large power companies have profited
substantially from California's energy crisis. According to the June 13, 2001
edition of the Los Angeles Times, several of them—including Dubya's Houston
buddy and sugar daddy, Enron CEO Jeffrey K. Skilling, have gained millions in
stock sales at two, three, and even 10 times the level of prior years.
As reported by Jerry Hirsch in the Times, here are just some of the energy
company executives who have been accused of profiteering while California's
residents are paying out the nose:
Kenneth Lay, chairman of Enron, netted $123 million in option transactions in
2000, triple his 1999 level and almost 10 times his 1998 net.
Robert D. Doty Jr., chief financial officer of Dynegy, exercised options at
$1.47 a share to purchase 40,000 shares of the company's stock Oct. 4. He
then sold the shares for $54.66 each, netting $2.13 million.
Lou Pai, chairman and chief executive of Enron Energy Services, filed
regulatory documents May 18 and May 29 announcing his intention to sell
390,000 shares of Enron stock for $21.17 million.
Peter Cartwright, chairman and chief executive of Calpine, from Feb. 22 to
March 2 exercised 188,000 options to purchase shares of his company at prices
ranging from 7 cents to $1.07. He netted $11.81 million.
David Arledge, a director of El Paso Corp., sold company stock for $23.28
million March 6 and 7.
Harvey Padewer, president of Duke Energy Corp.'s Energy Services division,
sold Duke stock for $12.26 million in February, netting $2.99 million.
Jeffrey K. Skilling, chief executive of Enron, filed regulatory documents May
16 announcing his intention to sell 140,000 shares of Enron stock for $7.98
million. In 2000, he netted more than $62 million in similar transactions.
"It stands to reason that if the companies are making exorbitant profits,"
noted Loretta Lynch, president of the California Public Utilities Commission,
"then the individuals who run the companies are also making exorbitant
profits."
My favorite uncle, Coburn R. Howard of Tennessee, a WW II vet, lifelong
Democrat and union activist who passed away a couple of years ago, was right
(as he was much of the time). "When the Republicans are in office, the rich
just get richer and the poor just get poorer."
We'll do this all again next week, folks, so please come back.
